Their support will answer, except that they won't tell you how long it will take to get your money or how far you are in the queue.
Since then I've found a local exchange (anx.hk) in Hong Kong that is Government registered and actually pays out quickly (got my money in 3 days after testing a sale of a btc). They accept International accounts in USD as well apparently.
If I were you, I'd just try it: ask MtGox to revert your waiting transfers, buy some btc, transfer them to the new exchange and try to cash out.
(PS: Not affiliated in any way to them, just a user).
This won't be useful now, but always check bitcointalk.org before dealing with an exchange.
Coinbase is a better one to use, if you can use it. I would also recommend CampBX. This is biased towards an American perspective.
- open a bitstamp account, get it verified
- wait for the price between bitstamp and mtgox to be stable
- convert your mtgox usd to btc
- immediately transfer your btc to bitstamp
- immediately convert your btc back to bitstamp usd
- withdraw the usd
Only issue: hope the price doesn't move too much while it is in BTC.
That's why MtGox price is inflated, high price != the best place to sell.
I have 2 BTC and was hoping to sell to grab a MacBook but I get the feeling turds and fan are going to impact each other soon.
Broker: "This stock is at 1 cent and could keep on going up."
The next day:
Broker: "Good news, the stock is at 3 cents and is showing no signs of slowing."
Broker: "Awesome news, the stock is at 10 cents and people think it could hit 50 cents in a week."
Broker: " . . . to whom?"
Edit: really ? downvotes on this ? why ?
but.... whos to say the Bitcoin exchanges are better at banking than traditional banking industries? I understand they represent individual points of failure in the ecosystem, but soooooooo many users have gotten screwed by them thus far.
It was a quick purchase of a couple of bitcoins to see what the fuss was about. They've just sat in my wallet for a period of time.
They're better than the banking industry already (I've worked in it and can attest to how bad it is) but then again so is Jimmy Saville...
Coinbase seems a lot more trustworthy in this department, but I don't fully understand how their exchange works. BTC-e seems to hit a relatively decent middle-ground.
Because the maximum number of coins is fixed it's pretty easy to project where the valuation is headed, and so anyone in their right mind should just hoard their BTC instead of spending it, which in turn should drive the price down, no?
Yet if you look at /r/BitCoin, there are dozens of "OMG!! I spent all my bitcoins on Pizza instead of holding on to them, look at this gif of me being sad"
So to answer your question, it's just insanity.
I miss the days before this month when BitCoin prices were stable for a couple of months. Spending it was actually pretty cool.
When spending within the economy is restricted in this way by market forces value will concentrate very highly in essential goods and infrastructure and attracting rent-seekers to those areas of investment. The net result, it seems to me, is casting off the tyranny of fiat currency for a new kind of tyranny. The same kind that lead to the trust-busting era in US politics.
I estimate that we'd have about 60-70% unemployment, and no jobs for those people to go to because, well, other people just aren't spending any money.
Otherwise, what can you buy with bitcoins that you can't buy with dollars?
It's not easy to predict the valuation. For that, we would need to know how much business is done in bitcoin in the future. That's anyone's guess. Will it do $1 trillion or will it do more ?
The price isn't always going to rise at this rate. That's for certain. However, yes, there will probably be a long term rise until bitcoin finds it true usage, market cap, and as a result of this, it's value with steady deflation going forward.
While, I'm not sure what an economist's opinion on this is, the fact that you are encouraged to spend money because it's worth less in the future (inflationary fiat money) leaves a really bad taste in my mouth. Consumerism is a horrible disease and our planet is suffering from it every. single. day.
That brings me to bitcoin and it's deflationary nature. Well, you're still going to buy the stuff you want to buy. Then, you'll save more because you know it'll be worth more later. Why wouldn't you buy the things you always need ? (food, shelter, a few gadgets, etc.) Should I spend on a new iPad when I might be able to buy 6 months worth of food with that money a year or two later ?
You'll save as much as you can. You'll consume less junk. Isn't that a good thing ? Shouldn't we ask ourselves if we really need all the crap we keep buying ?
These are interesting questions that challenge the entire nature of mindless consumerism that most of us indulge in these days.
Also, if the only reason you spend your money is because it's going to be worth less tomorrow then you have bigger problems than bitcoin ;)
PS - I don't mean you personally, just stating some thoughts.
If I had 1/1000th of the country's wealth in dollars under my mattress or gold buried in my yard or bitcoins in the cloud, and then go into suspended animation for 50 years, there is no reason I should still expect to have 1/1000th of the country's then-increased wealth. My capital wasn't doing anything to grow the economy.
You can argue "but wouldn't it be great if you could take that 50-year nap and have more money?" Yes, it would. You have also described an excellent reason for someone to start a pyramid scheme, but not for everyone else to want to get in on it.
However, there is a lack of choice in this scenario. Due to the way the economy functions, I do have to put my money into a bank, I do have to look into investments because otherwise my hard earned money is worth less in the future. Let's leave the discussion about that being fair or unfair, etc. because this is a subject where people tend to have strong opinions.
Right, so coming to bitcoin. Why can't there be an entity that allows you to lend your bitcoin as a loan and you get a higher return (higher % interest than regular deflation) because you lent your money out (i.e. took some risk) ? Say deflation is 5% per year and you can give out a loan through some entity and get 10% returns ?
Isn't this what the bank does right now for you ? But do you have much of a choice in the current scenario ? Right now, you take on the risk of a bank without having a say in it. It's either that, or have your purchasing power slowly eroded over time.
I personally don't like arguing about inflation vs. deflation because I am not an economist but I can on my own think of trivial solutions that turn the problem around. Maybe these solutions are ultra complex to implement in practice, but so are the economy, currency markets, stock markets, etc.
Can I argue that it would be great if I worked hard to earn money and save it, and have it at the very least, retain it's value and purchasing power in the future? Why should the capital that I have worked hard to earn lose it's value because it somehow doesn't help the economy ? Helping the economy comes with it's own risks. Why do I not have a say in whether I have that choice or not ? What happens if my bank goes bankrupt ?
You may argue "it should not be this way" but people are tired of losing 20%+ (in some countries, 3-4% in the US) of their wealth yearly due to inflation.
Bitcoin elegantly fixes a very real problem of inflation. You cannot wave your hands telling people "this is the way things should be, deal with it".
Presently, you can't really buy things you "need" with Bitcoin. Ask a landlord if you can pay your rent in BTC or a bank if you can pay your mortgage with it. Take your Bitcoin wallet to the grocery store and try to check out with it. You'll get blank stares at best.
On the other hand, you can buy things like iPads with BTC. The Bitcoin economy is not an economy of essential items right now, and this is largely because even if it were possible to pay for essential items in BTC it would still be just as easy if not easier to do so using some sort of fiat money.
The whole philosophical justification for Bitcoin is fine, and I am on board with that. But the present price dynamics of Bitcoin are directly undermining its viability as a currency and the philosophical motivations that support it. Satoshi was frustrated with the destabilizing monetary policy of the Fed, but having rampant price speculation due to an inherently depreciating currency isn't any better.
The rampant volatility of bitcoin is bad for business but it's analogous to several people jumping onto a boat and rocking it a lot. Eventually we get a bigger more stable boat that isn't so easy to rock any more. (a $1.2MM sell off a year ago would have tanked BTC value, now it doesn't even dent it.., this happened yesterday while I was watching the bitstamp order book)
As the market cap of bitcoin increases it will get harder and harder to cause huge swings in it's value (sort of like the 51% attack is now impossible.. or adding a server farm to take over the bitcoin network).
But to get there it will have to go through this process.
If you have 0.02 BTC (~$20), you can spend $20 on a pizza, keeping your 0.02 BTC. Or you can spend 0.02 BTC on the pizza, and have $20 more USD to buy BTC with.
This of course assumes you can easily transact with BTC, and convert USD <-> BTC, which seems to be anything but a sure thing.
If I think that my 0.02 BTC could get me two pizzas tomorrow, why would I trade that amount for one pizza today?
My point is that the decision to transact using BTC is independent from the the decision to accumulate BTC. If you want to hoard BTC because you think it will keep going up in value, then convert all your USD to BTC right now. And then if you want to buy a pizza so you don't starve to death, buy it using any currency you like, while continuing to invest all your disposable (ie non-pizza) currency into BTC.
If you're sure you're going to buy a pizza with BTC tomorrow, why not buy the BTC today, or five days ago? The prices have been pretty consistently going up. Yeah, there's a chance that pizza will have been 5% cheaper if you bought the coin to pay for it yesterday, or if you wait til tomorrow.
So, why wouldn't you just take all of your USD savings and convert them to BTC? Wait, you mean to tell me you _only have_ that 0.02BTC? (Wait, you mean to tell me you only have that $20 in the bank?)
I have way more USD value of BTC than I ever planned on having. It started as $50 and when that performed well, I put some more in, and bought some mining equipment, and put some more in, and now it has significantly more than eclipsed my USD cash savings at this point. It is for this reason that I would love to spend BTC, in fact it's a karmic imperative for me to try to spend BTC, since I've done so well with it so far.
I can always replace it at the market rate at Coinbase. If you're spending the bitcoins and you're valuing them lower than it costs you to replace them, you're getting screwed. If things keep moving the way they are moving, you're going to have a talk with your vendor that accepts bitcoins. (It's always fun to get to ask, "Tell me why am I paying you extra?")
I make more hoarding a few meager bitcoins in the midst of this bubble than riding a desk at my dayjob. So you can see why I am in your corner.
Still, I don't think there has been a bad day to buy BTC in the last (how long has bitcoin existed so far?). I recognize that I would be a fool to keep less actual fungible cash than I need for groceries, rent, etc, and when I can use a Bitcoin in an actual transaction with a person (rather than trading it for cash at an exchange), I feel that it's probably a good idea to use some of that cash I saved to offset the impact to my BTC portfolio.
All that being said, when I watched the price take a minor tumble the other day, from 850 to 785, I got nervous and went to SatoshiDice to recoup my perceived losses in an even riskier way.
Nobody will take my bitcoins in exchange for anything I need (I can't spend them on rent, I can't pay taxes with them, I can't leave them at the grocery store or at the restaurant or the bar), apart from the exchange site (which will give me cash, that I do need)... but I have all of the cash I need for the moment and it doesn't do any fun tricks like these BTC.
So why am I buying pizza again?
I don't know if all that's a sign of a healthy market, but I don't think so. Still, you weigh the facts, you pick your horses and you take your chances.
I encourage you to read up on the recent history of Iceland's currency.
If the price keeps rising, you are right a smaller percentage of all bitcoins will be in active circulation, because people want to save their coins instead of spending them. However, SOME coins will always be spent (people gotta eat.)
Here's the counterintuitive part: The currency "notices" the low rate of spending and will increase its own value to make sure the amount being circulated, though lower in face value, remains constant in its real value.
In short: Hoarding is fine, because the un-hoarded coins increase in value to compensate. As economists say, this is not a "zero sum game", we can have high spending AND high hoarding without difficulty, if the currency has a large enough market cap.
As do hoarded coins, neatly transferring wealth from the productive economy to people who just sit on their coins.
Count me out.
The current system puts money in the hands of those who run the printing presses. (and as I explained, the fact that coins are being "sit on" is irrelevant)
Not when they're getting richer just by sitting on cash they are not. That's not producing anything, any/all productive work they did was in the past.
>> The current system puts money in the hands of those who run the printing presses.
We're not talking about the current system, we're talking about Bitcoin.
>> (and as I explained, the fact that coins are being "sit on" is irrelevant)
Except it's not irrelevant, for the reason I've just mentioned. You can dismiss or ignore it all you like but simply saying "You're wrong" doesn't cut it.
If the amount of currency in circulation goes down because people sit on it, then yes the rest may well increase in value to cover the activity in the economy, but the hoarder gains economic power on the backs of everyone else's work.
>> Not when they're getting richer just by sitting on cash they are not. That's not producing anything, any/all productive work they did was in the past.
If they are getting richer just by sitting on cash, it means - by definition - that the economy is increasing in size. If it ever comes to a point where too many people just sit on their savings, then the economy will retract, and all these people will start to lose wealth.
There's a balance in the system: when the economy increases too quickly, it will incentivize people to stop producing (because they can live off their savings), and when the economy starts contracting, it incentivizes people to start producing (because their savings are getting worth less).
It might just mean that more people are sitting on currency and less is in circulation.
OK, now SOMEBODY has to have economic power- So it can't be people who have earned money (as it is with bitcoin) and it can't be the owners of the printing presses (apparently I'm not allowed to say that)...
...so who's left? Should we create a currency that immediately bursts in flames unless it is provably handed to another person within 24 hours? Wouldn't that still be deflationary without printing presses?
EDIT: Maybe you want all the economic power to be with cryptocurrency miners, via an inflating cryptocurrency? So now we're back to giving the power to those who own the presses (the miners, in this case)
At the moment at least if you want to use money to make money you invest it, and by doing so you enable further economic activity.
Ideally a currency would expand at a rough pace with the economy it serves, making it a reasonable store of value but a better fit for its primary function - a medium of exchange. The two purposes (fixed supply asset, medium of exchange) are not really compatible AFAICT.
But then I'm not horrified by the idea* of central government controlling currency anyway, in theory it allows them a mechanism to smooth out some of the lumps and bumps in the economy. And while currency inflation above and beyond economic growth does effectively constitute a tax, I have no issue with reasonable* taxes.
So in summary - I think BTC would be worse choice than what we have now, but neither is perfect.
(*I said the idea, and I said reasonable, I know there's a hell of a lot wrong with how various governments handle their currency and the amount of wasted taxes)
So tell me. If I work for a year and save up $10,000, and when 10 years have passed a car can be made using only 50% of the labor that was required 10 years ago - and, consequently, the car is cheaper than it was 10 years ago - who is more entitled to this increased in wealth than me?
The increased productivity has to benefit someone. I don't think money producers deserve the benefit more than the saver.
Again, if the saver is not the appropriate recipient of the added purchasing power that an increase in productivity leads to, who is?
Not something I'm willing to sign up for.
But you still haven't answered my question: why is the money producer - who makes sure we have inflation - a more deserving recipient of the increase in wealth from increased productivity than the money saver?
That's certain goods getting cheaper, not an appreciating hold over the economy in general that a deflating currency represents.
>> But you still haven't answered my question: why is the money producer - who makes sure we have inflation - a more deserving recipient of the increase in wealth from increased productivity than the money saver?
Deserve? That sounds awfully like a moral judgement...
But I don't think you'll find I said that either one deserves it. I said that I'm not going to, by choice, buy into an economy where my effort enriches currency-squatters. That's not my idea of fun. A currency that inflates roughly in line with economic expansion is more pragmatic.
And frankly, if it goes to the money-printers, well that's the government and in theory they get to use it to build useful stuff we all use. I have no issue with reasonable taxes.
The higher the price of BTC, the more expensive it is. The average transaction fees for BTCs have reached around $0.10 now, and will only rise as the BTC exchanges go up.
Regardless of how you cut it, this rampant speculation on BTC is hurting the BTC enthusiast (who wants to spend BTC), and instead favors the BTC speculator (who simply wants to cash out before BTC crashes)
This represents the number of people using Silk Road (well... used to anyway), maybe purchasing domain names through Namecheap, and so forth. People out there are trying to use BTC as a currency, so they will be spending BTCs in exchange for services.
Now, if the amount of BTC starts to shrink, then the "value" of BTC needs to grow to compensate. At this point, governments would typically print money, so that the price of a currency wouldn't deflate significantly. But since BTCs don't have a means of "printing money" to meet demand... we are seeing the massive deflation in the currency right now.
Massive deflation discourages spending, and encourages more speculation. As more people speculate on the currency, the price goes higher and higher, driving more deflation. So the currency is in a deflationary death-loop right now.
People will only use BTC if it stabilizes to a price. But as it stands, its simply better to speculate (which means there is no "value" in using BTCs right now).
It encourages a lower PERCENTAGE of spending, but has no impact on real value of the bitcoins being spent (i.e. how many eggs/houses/etc the coins in circulation could buy)
now for me, as well as probably others.. i got so much upside on my bitcoin i don't mind spending a bit here and there. i still hold it mainly as speculation because i deeply believe in its long term value--but i bought a plane ticket at like $860/btc .. no regrets whatsoever. i got to buy a frickin plane ticket with frickin bitcoin.. that might seem like 'oh yeah whatever' to most people, but if you have been watching bitcoin for years, as I have.. as many people with decent stashes have, that is one of the main things people came back to again and again to say "it will be a real currency when".
i am waaaay over vested in bitcoin so i can't justify 'replacing' my bitcoin anymore; when i am so exposed to the exchange rate; but 'spending it' is like cashing it out
I share a negative feeling when i think that someone with 10k U$S in BTC last year is now a multi-millionaire, i find it hard to believe that much value was created.
My surprise is that those insta-millionaire's arent cashing out. Or if they are, the demmand is so big its still working out.
Anyone going on about "intrinsic value" is missing the "intrinsic value" of the protocol.
Up surely, as the hoarding scarcity makes buying harder and creates demand?
Either way, yes, it destroys the utility as a currency. Which is probably a good thing, I don't like BTC as a currency.
 The price on exchanges where you can actually withdraw USD, e.g. bitstamp
You can compare bitsmap with EUs market since that's what they seem to support better
However if it truly wants to be considered a currency, the developments it needs are more ATMs (like the one Vancouver), more merchants accepting bitcoin, and more adoption in terms of velocity.
I wrote about it here:
Now that's 1 bn people there, so if it finds broader adoption in the country we could see further price increases (if we divide all Bitcoins that will ever exist by the population of China, everyone there will get 0.02 BTC). So if the current trend holds true and the adoption takes on there.. Now let's say India, Africa or most of south america get wind of it.. Africa in particular has difficulty with local currencies and a relatively good mobile network, so it is well possible and the other countries certainly don't want to be left out either. And then there is Europe and the rest of Asia..
So let's say 5 bn people want some part of it (just to buy 1/2 carton of milk), we are at 0.004 BTC. But then, some are greedy and want more than average, so.. you might get the idea.
Edit: thinking about it, at current price ca. 0.001 BTC / 1/2 carton of milk, you could actually buy all those people one serving (excluding shipping). Now if people want to buy cars or houses or ponies, we have to split that a bit further.
But it's warped because I can't buy things in bitcoin. Not much, anyway. So I don't know what to think about $1,000 = 1 BTC.
There are only about 12 million BTC. The limit of just under 21 million will be hit in 2140.
This is a bubble, clear as day! Some are not going to have a good time at some point, whenever that point comes.
There is seriously something wrong with an economy when millionaires are made for nothing but being first.
Tell that to every land speculator or homesteader who struck gold, oil or fertile land (but ignore the natives, they only complicate this). Being first is a huge part of any economy. They took the risk with their cpu cycles, electricity or money, if it's successful, they will get the payout.
It is still daunting for me, that i have bought bitcoin and made a few bucks on it, that someone that bought 10k bitcoins last year is now a multi-millionaire.
The problem I have is that that's what I said at $6 per bitcoin. And $40. And $120. And god knows I said it at $200.
I'm kicking myself in the ass wondering why I didn't put $100 bucks in when I thought $1 per bitcoin was a lot. Was $100 really that much to lose?
First to invent something (Automobile, Computer, Smartphone, postit, ...). In line with Henry Ford being first means doing something or inventing something, i.e. believing in something even though most others thought it was a futile or stupid attempt. When cars were invented, most people thought they were stupid and useless. Carl Benz and Henry Ford believed in cars, nevertheless.
They were so smart to be among the first to believe in an idea. Same goes for the early bitcoin miners. Now you may say that the car needed to be invented, but even in early mining days, the algorithms had to be ported to the GPU, and then people build huge rigs and spend all their time coding and building the mining system even though bitcoin was still worthless. Of course, some people just installed the client and generated a couple hundred of coins, but even these, they were early believers, much like an early employee at a startup, who is willing to work for sub-par payment because the likes the idea.
I really don't see the difference.
While it's clearly too late to be first, second isn't a bad place either. Just that the arbitrary line is the sand is higher. You can still ride the wave created by the early adopters (who took on the initial risk and validated the entire ecosystem).
As an aside - it would be interesting to see the adoption curve for BTC as compared to Paypal (probably the last disruptive financial platform) and whatever else preceded that (Western union, gold, seashells?).
Nonetheless, I share your pain of not having invested more at the beginning, but that's just the nature of any speculative investment / bet.
When it's suddenly broken, well, people will sell off and lead the value to zero.
I bet it will replace currencies, gold and silver.
I wonder because I've noticed that generally people who bet on bitcoin as "world money" seem to forget a few things: 1. the information infrastructure necessary for bitcoin is not universal and requires constant upkeep (thus a stable political and economic climate) and 2. there are currently many currencies and the world seems to get by with them. Is there reason to believe that bitcoin's adoption will be fostered by the necessary stable political climate and if it's enough of an improvement over paper monies to replace them entirely?
EDIT: I guess to summarize what now seems to be a confusing point: my dollar still work fine. What does bitcoin have that will motivate me to replace my dollars?
NOTE: I hold bitcoins and will continue to hold them. I buy webhosting and a few other things with them on a fairly regular basis.
Our whole global economy and lifestyle enjoyed by billions of people needs computers and electricity, otherwise we go back to middle ages.
People want one money - most liquid, most used one. Gold does not fly, USD is politically controlled and restricted. Bitcoin weights zero and unrestricted by design.
Well, "whole" is a strong word here. I would try using bitcoin in Cuba. Or Russia. Or some parts of Montana. Good luck getting a wireless signal.
>People want one money
I'll need a citation for this. I think instability in the Eurozone has more or less turned this idea on its head. If people wanted one money, we would have one money. The fact that major economic players either never joined the Euro or now want out indicates to me that "one money" is not a universal desire.
It's logically easy to prove. Which money would you choose to store permanently? Bitcoin if it's accepted everywhere in the world, or EUR if it's only accepted in 20 countries? Who knows where you'll be next year, so it's better to store money in a more liquid currency. Bitcoin can be it because there are no fees or capital controls like in EUR or USD.
In Russia, in 1990s people were using dollars no problem. Until government went in with laws forcing people to put prices in roubles and other controls on flow of capital and cash.
All else being equal, the more people who decide to use or hold Bitcoin, the higher its price will be, because the maximum number of bitcoins that can ever exist is permanently fixed. It's a scarce commodity by design.
So, greater adoption = higher price.
 In early 2011, I speculated it could take a decade for price to reach the thousands of US dollars per Bitcoin: http://cs702.wordpress.com/2011/05/29/on-the-potential-adopt...
The gold standard was broken, can they not have a "bitcoin standard" and then break that in the same way?
Gold has to be "converted" to paper to be practical. Bitcoin is already a whole lot more practical than almost any aspect of the modern money infrastructure, so there's no "killer app" for Bitcoin-backed currency.
Banks extend credit money which is backed by reserve currencies. Money may start out as value-based (gold, bitcoins) but eventually a whole credit based economy springs up around it, and we're just where we started.
The "killer app" isn't being able to pay someone quicker. It's going to be the ability to borrow money!
(Although paying someone quicker is already the main reason two people use blockchain.info or something similar to transfer money instantly instead of waiting for a few confirmations. In small amounts you'll see "banking" like this, and then those banks will start lending money on the reserves they have.)
In other words, the same cycle always happens:
1) A value (scarcity) based currency is widely acepted
2) People store it when they aren't using it. They want to earn returns on it.
3) It is lent out by the "banks" to others, keeping a fraction on reserve
4) Governments regulate these reserve requirements and set up central banks which pay interest on the reserves
Now with Bitcoin right now the biggest thing stopping it from being used as a currency and 1-4 to happen is th massive price inflation. Who wants to spend a bitcoin when they can hoard it? Lots of people but apparently more people want to hoard it. Which is understandable because metcalfe's law is going to make ALMOST ALL the cryptocurrencies grow in value.
The good news is that this will make even more merchants accept bitcoin and once its price settles down (it might reach a saturation point only when many many merchants accept it, would be at least $100k a coin by then) then it can be used as a real currency that people really spend.
But then 1-4 will occur!
Sorry, you don't know how a bank works. The bank will borrow from someone else - depositors, other banks. The reserve requirements is how much of their own money they need to have to cover loans, and is a protection against risks, it does not imply that the rest of the money they hand out have been created out of the blue.
Yes, they will collect based on leveraging their capital, borrowing money at lower interest, and profiting from the multiplier.
But as to your scenario where the bank just hands out papers saying "here's 10BTC": In fact, you can already speculate on margin, on Bitcoin by buying Bitcoin CFD's (Contracts for Difference). CFD's means you're never actually owning the underlying security at all (and in fact there's no technical reason why the company you enter a contract with needs to ever own any at all either; whether there are legal reasons may depend on jurisdiction) - you're just, as it says, entering into a contract where you're putting up some cash now to be paid the difference in value over a time period.
I have an account with a company that would me buy Bitcoin CFD's with a 15% margin if I'd like. Meaning for $15, I "get" $100 worth of "here's some bitcoin" "paper" - if those $100 worth of BTC increase to $110, I can sell and get $25 back. Conversely, if they drop to $50, I'd get a nasty margin call to pay the $35 difference.
(yes, CFD's are high risk)
Bitcoin's scarcity is based on a completely fictional and arbitrary hard limit of 21 million which can be changed in a trivial fork such as Litecoin.
Furthermore, given that there is no intrinsic physical difference between a Litecoin, Freicoin, Bitcoin etc. there is an argument that a P2P currency is the ultimate fiat. The printing presses have just been handed to the public rather than being held by a select few.
Bitcoin is a great electronic currency, and a real challenge to money transmitters like Western Union, but it is not a store of wealth (in my opinion).
Limited resource physical commodities vs. a few bytes on your filesystem? This is a ridiculous comparison.
But what people mean when they say you could fork libcoin or something like that is not that Bitcoin isn't scarce. It's more along the lines of "We are in no way beholden to this psychotic black market pyramid scheme currency. We can just start anew with a better dispersement/capping scheme."
Referring to the bytes that constitute a valid block in the blockchain.
What distinguishes one blockchain from another? Nothing, they're just numbers.
What distinguishes gold from silver? Nature.
You can store your wealth in any commodity. I can store my value in stocks, gold or BitCoin to hedge against inflation. Just because something doesn't have physical intrinsic properties does not mean it somehow stops being a store of value.
Anything that someone wants to buy and someone wants to sell, that can be stored and transferred, can be a store of value.
Changed in a fork? Yes. Trivial? Not even close. Remember, you have to convince a lot of people to go along with your fork, due to the network effects required to get a new currency off the ground.
Does anyone remember the million dollar page?
As to being a fixed currency there would be a lot more bitcoins in circulation than actually exist as soon as banks started lending money and no you don't want to try and keep 100+k USD worth of bitcoins secure by your self it's just a fucking bad idea. Which means banks which means loans which inflates the currency. Of course because governments can't print money to bail out banks when they fail you just lose your money anyway and they will fail.
PS: Non private wallet = bank. The reason we don't see loans is because people don't want to borrow money in bitcoins.
The bank would have a database somewhere saying "We owe btbuildem 10 BTC". When you make a withdrawal they would take some out of their massive stock and hand them to you. So long as they have enough to cover withdrawals at any given moment they don't need enough to cover if everyone made a withdrawal at once, any more than they do with dollars/pounds/etc.
If I lend someone 1 BTC, can I force the borrower to repay me in BTC? How would that even work if the borrower has already spent the BTC?
If you give the borrower a loan priced in BTC, you can attempt to compel them to repay the loan in a BTC-equivalent amount of their local currency. "Legal for all debts, public and private", and all that.
If the government is unable to deliver the promised BTC when bearers request it, the utility of the government-printed notes is severely diminished.
The gold standard was broken when the US Dollar had sufficient fiat value that people were willing to accept it without the gold backing.
Don't think of it as dollars, think of it as gold (especially when gold was broken down in smaller bits and traded in streets or held in the form of gold bars).
Bitcoin's being used in stores is a complete possibility, but dollars will always be accepted (at least for the next several decades or longer). The current economic system is only sustainable will a currency the government can control. Although I dislike the idea that the government can "print money" unless the economy takes a pretty large pivot (which will take decades) at a gradual rate there will be major issues. If the change into cryptocurrencies is to fast we will see a MAJOR depression.
I would also speculate that the government will come out with it's own form of cryptocurrancy soon enough.
Still though, the early adopters have a much greater shot at grabbin all the marbles, just people suspect they won't because it's been a while and they still haven't. So either they're
A) Absurdly greedy.
B) Asleep at the wheel.
C) True believers in the idea & want to see it succeed.
D) Cashing out coins periodically enough to give them a decent lifestyle without disrupting the ecosystem.
Here's a thing: in both cases, when Bitcoin is a fraud and joke, and when Bitcoin is a future world-changing technology, price must grow up like crazy. So the price alone does not give us any clue about the nature of Bitcoin. Only analysis of fundamentals and analysis of the econo-political environment we are in can tell us something about value of Bitcoin.
The only thing keeping it alive is that people are still willing to buy/trade it. As long as that is the case, it will exist. But I don't agree with this idea that it could be rapidly increasing in price because its "a future world-changing technology". This argument has never made sense to me because it's simply 1 implementation of cryptocurrency and has not even performed its function as such. I'm sure there are better possible versions. In fact, I highly suspect that a better alternative has ALREADY BEEN IMPLEMENTED!
The only reason Bitcoin is the giant that can't be defeated is because of the lure as an investment, and this is all a sham. Early adopters probably are doing "option D" and even though it's somewhat unnoticeable to consumers it is likely sowing the seeds of destruction for the environment. Perhaps because they're abusing users trust by selling for high prices that are bound to crash. I'm not sure... but the point is, eventually people will stop buying when they realize they're paying $1000 for a coin and they don't even know wtf it is.
As you said, only analysis of the fundamentals achieves anything. And these analyses have been done. And can be seen in the market. It's obvious at this point -- Bitcoin is worth what people believe it's worth. Fundamentally, it's nothing. They are sold for cash & then that cash is gone. Spent. The currency doesn't retain anything on it's own. The burden of maintaining the ecosystem stability is passed on to those who now have the money.
Similarly to the way in MLM a salesman's sub-tree is responsible for making the product move, unless they can find another to pass the product along to.
When you dismiss Bitcoin by saying it's only there while "people are still willing to buy/trade" you are missing important point. Ask yourself: why people are willing to hold it. Why people are willing to have any money at all: USD, gold, seashells. Are they stupid? Or money gives some utility to them?
If you asked Viking long boat builders to evaluate modern day aircraft carriers I'm pretty sure they would tell you it won't float.
Similarly, if you're going to assert that current economic theories don't apply to BTC because it's special, then you better be prepared to follow that up with an enumeration of what those special characteristics are and why they matter. And then you better be prepared to follow that up with a new theory of economics that does a better job of explaining the behavior of both BTC and other currencies as well.
Otherwise it's impossible for others to distinguish a credible objection from wishful thinking. Which is a kind of critical distinction to make, because history tells us that whenever the price of something starts going up rapidly and people start talking about how the economic orthodoxy doesn't apply anymore because this time it's different, nearly 100% of the time what happens next is a tragedy.
Quality of an implementation doesn't imply success. Success also depends on other factors.
History is full of examples (e.g. Betamax).
Plus, it's very naive to assume that a Bitcoin is nothing because the only things that gives it value is the belief of people. Belief of people has value.
Plus, it's not clear how long the prices will rise, and if something's going to happen in the meanwhile (e.g. more shops accepting it).
If it's a bubble, it can't be said with certainty until the bubble bursted.
This is why the real world currencies which arent "backed by anything" still make people wake up at 6 every morning, drag around for 9-10 hours of the day and then spend those on food and cover. The us/eur currencies have the value of the social contracts that are based and exchanged due to these currencies. The value comes from making people do things for it, and cash seems to be doing that quite well even if it isnt backed by anything.
What Im trying to get at, its the social contracts that exist in the millions - employer employee government - that make up and back up the value of any currency.
For BTC to succeed as a currency, people need to exchange their goods and services for it, especially their time, their work. It isnt enough to buy or sell ready-made goods, its the producers that need to be payed in bitcoin, only then a real revolution can happen.
Frankly, I have a hard time seeing how such a transformation could or would happen - for people to start getting payed in BTC. A company cant just do that, they have taxes and laws to follow.
Currency can exist purely through the means of social contract, I'm in total agreement with that. But Bitcoin's volatility is not exactly "good PR" unless people are actually delusional enough to believe that the value is massively increasing because it's "clever and people are beginning to understand it". It's soaring because it's clever and people don't get it at all.
Given all of the shady baggage and investment scheming associated with the ecosystem I don't think it will ever reach the level of widespread social contract.
it's not that I love the dollar or anything it's just that the dollar is an agreed upon currency and Bitcoin is still just a trading market. Since it's yet to be proven that it's performing its stated purpose (transactional currency), there's no reason why the market for it won't just disappear one day with a crash so bad that selling at a loss isn't even possible -- the faith is just gone.
Now I believe a persons wage is the biggest monthly transaction they perform - work and monthly wage pays out, in what currency?
When bitcoin reaches that point, if ever, where employers pay their employees and taxes in BTC. Then its a currency. Now its a speculative bubble - for which it may still be a good idea to get behind and compete with all the other gamblers.
you may be able to make some money it's true but I think if you believe it to be a ponzi scheme it is immoral to get involved. that's my basic stance. I can live life just fine without it
Bitcoin isnt a classical scheme like that Maddofs guy. Its already too big for that.
Economics is obviously useful, but it is by no means a mature "science."
And higher price will tend to lead towards greater adoption.
Anyone who purchased _anything_ using BTC is kicking themselves right now. The current market conditions discourage spending of any kind.
Unless all of your wealth is already in Bitcoin then buying something with bitcoin isn't really any different than not buy butcoins with your other currency.
When the price of BTC goes up by orders of magnitude over the course of a couple of years, people are discouraged from making purchases of any kind.
So clearly, YOU value the fact that someone paid BTC for pizza two years ago. And you continue to value the fact that people are spending BTCs as a currency.
But can you not see that this dramatic rise in prices discourages future spending? Will you buy a pizza today for 1 BTC? For 0.01 BTCs? Or are you going to continue to hoard BTCs and hope the bubble goes even higher?
People spending BTCs is the true value of Bitcoin, and the promise of the future. I'm worried what will happen when people stop spending BTCs because they've all turned into speculators.
No. I have purchased several things with BTC and I'm not kicking myself.
I have purchased:
Caramels for 8.211 BTC 1½ years ago
Caramels for 0.2977 BTC two weeks ago
A DAC two months ago
A VPS two weeks ago
As soon as BTC crashes, they'll all be gone. But the BTC Enthusiasts will carry forward, and hopefully learn that encouraging this kind of speculation is harmful to the "currency" that they wish to create.
I do think cryptocurrency has a future. However, the current price bubble is a _failure_ of BTC, not a success story. The only ones happy are speculators.
But as long as BTCs are touted as a anarcho-capalistic wet-dream, no one will wish to see the truth. BTC Miners are the government. They can change the "law of BTC" extremely easily.
I was under the impression that they couldn't. But yeah, it's shocking that people idolize the core devs even though they set up a failing system. My best idea I think was to set up a cryptocurrency that is 1:1 with the dollar, therefore if you need to print more you do it by well... putting some $$ in the vault and dumping the equivalent amount of units into the ecosystem.
Bitcoiners seem to hate the idea of using the dollar for stabilization though. It's an affront to the power of imagination and the aforementioned "anarcho-capalistic wet-dream".
Incidentally, Ripple seems to be an implementation of what I'm interested in. Yet for SOME GODDAM REASON I DO NOT UNDERSTAND, their internal cryptocurrency (XRP) has some dumbass dispersement scheme too.
Nobody has figured out a decentralized way to peg a cryptocurrency against some external price. You can't really measure the price that other people are paying in trades; you basically have to take their word for it, which means they would lie if it was in their interest.
That is it. Miners build the block chain. The most powerful computers working together build longer-blockchains (on the average). If a blockchain fork were to happen (again, like back in March: http://bitcoin.org/en/alert/2013-03-11-chain-fork), the miners can simply "vote" on which blockchain they want to keep.
Non-miners have no say in the matter. The BTC protocol says to trust the longest blockchain, and that is going to stay for the rest of BTC.
Thats why I consider the miners to be the governing body of BTC. If Miners wish to build blacklists and stop stolen BTC from going through the network, they can do so. If Miners wish to change the rules of BTC, they can do so (once more than 50% of miners agree... their blockchain will ultimately grow faster than the rest of the miners, which forces the network to conform to their rules).
Can you cite a real-world example of a deflationary "economic basket case"?
If people are to use it for transactions, stability is useful.
High prices do mean there is more to adopt, true.
The trick is to predict the point at which you'll no longer be able to find a greater fool, and stop just short of it.
Damn ArchLinux, I really hope you die in hell. At the moment around USD160000 lost. Anyway I am still sticking with you, in sickness and in health, in poverty or in wealth. Because you know, despite what you have done, you will be always by my side.
Think of it like you're losing 3 days of cpu cycles, not 160K.
What does this even mean? So is the USD, which is backed by nothing. Need more? Just print more!
Bitcoin, as stated a hundred times before, is limited in supply. Merchants left and right are now accepting Bitcoin. In fact, Gyft pretty much gives you access to all online merchants.
You know deflationary = hold and never spend, right? Not much use as a currency if there's no flow or will to exchange for goods.
It is a solution to the Triffin Dilemma, which in 2009 the Governor of The Bank of China wrote about. That same year Russia proposed a new international reserve currency backed by precious metals and a currency basket to solve the same problem. In South America there have been proposals for a petro dollar, backed by oil for the same reason.
Deflation is good for a reserve currency, in some ways it is fairer than gold because you don't have to rely on the geographical distribution of gold in the ground.
When the Wii was making record sales in the USA, Nintendo was reporting record losses. Why? Because the Yen to USD exchange hit 80 to 1, and all of a sudden Nintendo was making 20% less revenues on all US sales.
Deflation is BAD BAD BAD for companies who work with your currency.
When a country wants to buy oil for its economy, the oil price is set in the worlds reserve currency, USD. So the fluctuations between the USD and some given country, or the inflation of the USD will either hurt or help that country (but is always good for the US as the demand is high for that currency, keeping the demand strong). This is why countries/companies buy oil with gold sometimes, this is why countries hold gold to hedge inflation in a foreign currency they must rely on.
National currency (eg. USD) => Inflation bad.
Supranational currency (eg. gold) => Deflation good.
Do you see a symmetry of products vs. money? Both are assets that some people need and some other want to give. If one is in deflation, then another is in inflation to another. Why don't you buy MacBook 2 years from now, when it'll cost the same, but will be more awesome? Because you have non-infinite "time preference": you want certain things today vs. tomorrow.
Why people want to hold money? Because it gives them ability to spend it anytime on anything - it's most liquid, most desirable commodity. This is big value in having something in your wallet - freedom to make decisions in face of future uncertainty. If you can freely choose between money which loses in value and money which doesn't, which one every person would put their savings in? Then, everyone spends according to his own time preference - amount of desire to enjoy stuff today vs. tomorrow.
Here's also a thought experiment on deflationary spiral:
Because Japan's currency deflated, while the US currency inflated. Printing of money is simply a means to control deflation or inflation.
All of the "thought experiments" on deflationary spirals ignore the fact that one happened: the Great Depression of 1930s. And back then, the US Monetary system was pegged to the Gold Standard.
We fixed the problem by getting off the Gold Standard. It turns out, basing your country's economy on a deflating commodity was not a good idea.
Deflation is bad, we know its bad and when its bad. So should you peg a national currency to a deflationary commodity like BitCoin or gold? No. Can I use gold right now as a means of exchange? Yes. Does it happen all the time in regular life? No, because that would be a pain in the ass but if it were more convenient, it might. Well that is what BitCoin is, its gold but convenient to transfer.
Stop thinking of BitCoin as a national currency or a replacement for a national currency. It is a commodity like gold which can serve as a supranational currency or store of value, your national economy can still be inflationary.
But when you see websites saying "Pay for stuff here using BTC", it is clear that they are trying to make BTC into a currency.
Those who wish to use BTC as a currency are discouraged from doing so, as long as this stupid hyper-deflation is occurring. No one wants to spend BTC on anything anymore.
It is a currency. It satisfies the Coincidence of Wants, it is used as a means of exchange, that makes it a currency. Cigarettes have been used as a currency (in WW2 concentration camps, prison, times of famine or war etc.).
But nobody suggested cigarettes or tobacco be the thing we pegged our national currencies on, its just a thing that represented value that people traded for goods and services. That's a currency, not a national currency though (because as you mentioned earlier, that's probably a bad idea which we know from history with gold).
If you care about USD at the end of the day, then Gold has been a _terrible_ store of value this past year. After peaking at $1,800, Gold is currently trading at ~$1250.
If BTC follows the route that Gold has followed, we'll see a lot of sad investors.
That's the investment function of gold and other precious metals. That's why big financial organisations keep gold.
The same problems it has had for the last 10000 years. You can't seriously expect these "realizations" to have an effect on Gold prices.
Don't mistake the forest for the trees. When BTC learns to be less volatile, THEN we can start talking about replacing USD or EUR.
Until then, understand one thing. People want STABILITY in their currencies, at least if they are going to spend it.
Agreed. People are less likely to spend as the price climbs quickly. This can be mitigated with a viable options market, it would provide a hedge against bad movement and it would increase liquidity significantly which would lead to more stable growth.
Secondly, only very recent investors may worry about volatility. Everyone who bought in 1 or more ago don't care about volatility. All fluctuations are well above their nice profit and they can spend 1% of their stash comfortably, knowing that the remaining 99% are growing in value faster that the stash is being depleted. Today's investors would have to wait another month or year before they also get 10x return and won't worry about volatility.
"Store of value" works pretty well when your value not only stays the same, but increases over time. 10% jumps do not matter if you have 10x more than a year ago.
Supply and demand have an effect on the gold price. Markets go up, markets go down.
(Not that it might not be a good time to sell, but please sell for other reasons that snorkel's advice.)
I elaborated on this recently:
My supply-side model, which I felt pretty smug about for the last couple of months, only calls for a price of $450-500, so it clearly can't account for the current price. So much for that.
Seems likely then that this is coming from an increase in demand. Does anyone have any good guesses about where that increase in demand is coming from?
And China. Which we're working on a short documentary about http://kyledrake.net/bitcoinchina.html
Disclaimer: I have 4 BTC and probably will not cash out for less than $100K per.
People got exuberant with the fast ramp up to $500 and didn't want to get priced out. It happens often enough in other markets.
I was expecting BTC to hit $1000 in a few months anyway, depending on how quickly difficulty increases. So what could happen is the buzz dies down and the price just sits at $1000 for a couple of months and then once the difficulty increased the price will be locked in.
Likewise, real user demand could increase fast enough to take the place of any speculative demand before the proposed speculative bubble collapses.
Honestly what I really want to see is what happens if the bottom falls out and the price stays well below the mining cost for a prolonged time period. Say, $100 for 3-6 months. There are a number of non-disastrous things which could happen, but it is hard to guess what will.
It's going to be way more exciting if when bitcoin hits $100 than if it hits $10000.
However, one of the podcasts I was listening to said that a security company registered one of the random domains that Cryptolocker checks as its master control server so that they could measure the number of people who were infected. Their numbers showed around 15,000 unique IPs per week contacting their server. The ransom has been lowered to 0.5 BTC so if all 15k people paid the ransom this mean about $7.5 million dollars a week at current prices.
I'm not sure how much that would effect the price of bitcoin.
I remember a few years back there were stories about how broken the savings system was in China; something like the only two legal investments were state banks, which gave 1% interest when there was double-digit inflation, and real estate, where you could buy apartments in empty cities on the premise that it was really hard to do worse than the negative 10% real rate of return you got from banks. In that environment I could see how an investment vehicle like BTC could really take off.
Probably both, though its probably not simple to figure out the ratios.
Compare http://bitcoinwisdom.com/markets/btcchina/btccny and http://bitcoinwisdom.com/markets/mtgox/btcusd